Consider the following statements about the production possibility frontier (PPF):
(A) A PPF that is a downward sloping straight line shows a constant opportunity cost.
(B) A PPF that is concave to the origin shows that the opportunity cost of a good rises as more of it is produced.
(C) The slope of the PPF shows the marginal rate of transformation.
(D) A PPF slopes upward from left to right.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
Moving along a PPF, more of one good means less of the other. The cotton given up for one more unit of corn is its opportunity cost.
(A) A PPF that is a downward sloping straight line shows a constant opportunity cost. — Correct. On a straight line, each extra unit costs the same amount of the other good.
(B) A PPF that is concave to the origin shows that the opportunity cost of a good rises as more of it is produced. — Correct. Each extra unit of corn costs more cotton (1, 2, 3, then 4 units), so the curve bows outwards.
(C) The slope of the PPF shows the marginal rate of transformation. — Correct. The slope is the amount given up per extra unit, called the marginal rate of transformation.
(D) A PPF slopes upward from left to right. — Incorrect. More of one good means less of the other, so the PPF slopes downward.
Note: The terms ‘concave to the origin’, ‘marginal rate of transformation’ and the idea of a straight-line PPF are not in the NCERT book (2026-27), but NTA asks questions on them, so such questions are included here. A curve concave to the origin bulges outwards, away from the origin. The marginal rate of transformation is the amount of one good given up to produce one more unit of the other.
NCERT (2026-27): “Production Possibility Frontier If all the resources are used in the production of corn, the maximum amount of corn that can be produced is 4 units and if all resources are used in the production of cotton, at the most, 10 units of cotton can be produced. The economy can also produce 1 unit of corn and 9 units of cotton or 2 units of corn and 7 units of cotton or 3 units of corn and 4 units of cotton. There can be many other possibilities. …” “If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.” |